Accounting Information Systems - Assignment Example

?Accounting Information Systems Answer Air New Zealand is a domestic and international airline company. It is one of the famous airline companies based in New Zealand. This airline group provides cargo transport services and air passenger services. Apart from domestic region New Zealand, it also provides both the services in Australia, Asia, South West Pacific, United Kingdom and North America. Air New Zealand has also has diversification in aircraft engineering and ground handling services of airlines. Apart from it won services it also provides these two services to other domestic as well as international companies. Subsidiaries of this group also offer online ticket booking services, retailing and travel wholesaling services. Vision of the company is that it strives to become number airlines company in terms of customer satisfaction of services in every country where it provides services (Air New Zealand, 2012). The company is dedicated to become customers’ first choice of airlines for travelling to within and from New Zealand. The company has developed a competitive advantage in terms of creativity and innovation in its services quality. The company promotes the domestic culture, people, behaviors and quality of business practice to the overseas people. It also has a long term value i.e. growth company and contribution a major percentage to the domestic countries growth. The company has been awarded Airline of the year in 2010 and 2012 and it also achieved many national international awards for its quality services. According to company’s financial report of 2010, it has total assets of NZ$1,566 million and profit of NZ$82 million. Accounting information systems of the company refers to the efficient use information technology to management of company’s operating activities and recoding of daily financials transactions and information. Company provides high priority to its Accounting information systems as it maintains the company’s accounting and financial information and update daily basis. AIS help the company to operate accounting and financial management efficiently and easily. As AIS has higher involvement of information technology and computers systems, network, internet etc so there is higher possibility that the company could be exposed to computer fraud and abuse in many ways (Sori, 2009, p.36). There are some general types of threat related to accounting information systems of the company. Terrorist attack and natural deserter in New Zealand and other operating countries are considered as macroeconomic threats to the company’s information systems. Other micro environmental threats are malfunction of hardwires software errors, human unintentional manual errors, and lastly the most dangerous intentional acts or computer crimes. Now fraud refers to intentional unethical and unfair business practice by organizations or individual or groups. Supplier of product and services to this company might gain unethical interest or benefits over the company. Any individual within the organization may commit fraudulent activities intentionally for his or her individual interests. In efficient asset management through absence of internal control systems leads to theft of company’s valuable assets. Another affective type is fraudulent reporting of financial statements. Accounting information systems has given high priority and focus by the company to protect any fraudulent activities regarding financial reporting which is quarterly or yearly result of daily accounting records and maintenance and updating ethically and fairly representation of that. The company could be exposed to any type of fraudulent financial reporting due to some common reasons that leads to unethical business practice by the company. Presence of deceive creditors or suppliers, or investors might be the reason one reason. Another way of reporting fraudulent financial statements can be done by increasing the current market of share of the company. Third reason might be to collect investment to sufficient cash inflow to the company for managing operating activities of the company. Another reason for reporting fraudulent financial statements might be the intention of hiding company losses and other issues that might affect the company good will. Therefore core reason for fraudulent financial by the company is to hide all bad information about the company’s business activities and show growth and prospects of the company so that the investors do not hesitate to trust this company for their investment and also for getting credits by the suppliers and the creditors. There major factors that generally present behind any fraudulent activities. These are external pressure, opportunity for conducting fraudulent activities and rationalization. The company and an individual within the company have different motivation to conduct fraudulent activities. Individual can conduct fraud by emotional behavior, poor financial condition and intention to enhance lifestyle. The company itself can intentionally do fraudulent activities due poor performance compared to industry average and management characteristics to unethical business practice for their individual interest. The company could be exposed to computer fraud in perpetration, investigation and prosecution of past and current accounting records for reporting of final financial statements for the stakeholders of the company. There are multiple reasons for which the company the company unintentionally or intentionally attached with any types of fraudulent activities due to computer fraud. Many negligible frauds might be undetected which can results a big mismatch. There might be inefficient network security within the organization. High percentage of data might not be reported. Guides for each step for managing accounting information systems are easily available. Enforcement of law might be overburdened. Finally and most interesting reasons might be calculation process of loss might be difficult using information systems. Computer related frauds are of many types because computer covers wide areas and types of work. So, in each area of its work might result fraud by only human intention as it do not work for any work by its won. Fraud might be occurred at the time of input of accounting records or financial or operating data and figures of the company. Answer 2 Similar to many ways of conducting fraudulent activities, there are also many ways through which the company could protect itself from fraud and abuse. If control model theories are well implemented by the company in business operation and asset management practice then the company could protect intentional and unintentional fraudulent activities. Efficient control of internal operation can protect frauds and abuses. As an airlines company, Air New Zealand has all valuable high technology assets. So, the company needs to safeguard its major assets. Daily detailed records of operation and management of company assets needs to be maintained so that top management of operation department can track the performance and of assets and can recommend for service required. The employees should provide accurate and accurate information about performance, output and prospect of assets. Financial report should be prepared in accordance with standard criteria. Operational efficiency of the company needs to be enhanced so that performance of the assets also increased and provide better output. Managerial policies should be strict for encouraging accurate recording of asset management. Laws and regulations need to be well implemented so that intentions for fraudulent activities are restricted. Three major functions in the process of information system management are prevention, detection and corrective. The executive team of accounting information systems needs to review recording systems of accounting information to discover if any problems are there and they should immediately correct the problems. The areas where they can practice these functions are IC systems and its processes. Financial transactions should be processed correctly to avoid frauds and abuses (Klein, 1989, p.151). Sarbanes Oxley is a prevention model developed in 2002 by PCAOB. It is designed to prevent frauds and abuses in accounting information systems so that financial report become more transparent, investors interest are protected and punishment for intentional fraudulent activities have been developed. The top management of the company should internal control framework like control of objectives for accounting information technology and committee of sponsoring organization who will be responsible for internal control of the company. Enterprise risk management model should be applied for internal control of the company. Risk based verses control based risk management model is most effective to prevent frauds. Control environment of the company consists of board, top management, human resource and also executives. All department and divisions of the company group are under control environment. Objectives need to be set in four different areas of enterprise risk management systems. Company goals should be aligned with its mission, efficiency in business operations, reporting should be reliable and relevant for decision making by the company and other external stakeholders, laws and regulation should be followed in executing all of these business practices. Air New Zealand needs to undertake effective risk assessment. Impact of possible risk behind any strategic plan needs to be assessed before implementation of the plan. Risk remains after execution need to be reduced as much as possible to avoid further impact. In accounting information recording, a single employee should not be given too many responsibilities. The company should focus on the three key processes of AIS like authorization of receivables, recording transactions and custody management of fixed and current asset5s of the company. Finally, key activities to control frauds and abuses in AIS are efficient supervision of information systems, software and devices should frequently tracked, installing fraud detection software in participated systems and network of information systems, frequent audit should be practiced in accounting information systems. Answer 3 Committee of supporting organizations of Air New Zealand with respect to enterprise risk management will addresses and support basic internal control of the company and COBIT will control information technology related to accounting and other. Air New Zealand should focus on important characteristics of its information for management decision making. Accounting information need to be relevant and timely provided. Sourcing development of information should be cost effective and these need to be protected from the unauthorized discloser. Information need to be complete, valid and accurate with the original activity and these should easily available at requirement. Control of reporting of accounting information should ensure compliance with laws and regulations. Reliability of information is most important as it fulfill the needs of the target audience relevantly. Internal management and external stakeholders like investors, suppliers, creditors etc can access detailed information for financial and operating decision making. Therefore, Air New Zealand should very much focus on its management of its information systems apart from its international market penetration (Dalci & Tanis, n.d., pp.45-48). Management should develop strategies for organizing resources of information. They need to overseas required functionality for accounting information management. They also need to focus on the output of the information by resulting systems. Evaluating and monitoring of performance of information systems need to be focused by the management. Assumptions and subsets of reporting accounting information should be relevant for the external auditors. They need to control information systems and financial reliability. Management of Air New Zealand have substantial role in information systems security for protecting accounting information from frauds and abuses. They need to develop a culture of security awareness and practice of secure activities. They should put to the information resources and find out the possible risk to develop adequate response for that. Management need to efficiently develop strategies, policies, processes for prevention of security related frauds. Management should acquire and develop information technology resources for the company. They need to effectively monitor those for getting optimum effectiveness in terms of maintaining high security for information accounting information systems. A large company like Air New Zealand should not store huge data and multiple systems in a single mother computer as risk is highly concentrated in this process. So it needs to use cloud computing which provides strong control over access of server that host good security virtual network. Answer 4 Internal information regarding plan, policies, strategies etc is very sensitive information of an organization. Air New Zealand operates in highly competitive industry i.e. airlines industry where strategies, plans are changed very frequently to maintain competence in the market. Confidentiality of information reefers to unauthorized disclosure of plans, trade secrets is very important for a company to get trust of the customers to the organization. So, the company needs to address customer confidentiality through its secure business transaction with the customers and they it also need to keep customer personal and financial information very confidential. Customer need to trust this for providing any personal or financial information of them which also stimulate the acceptance of the brand by the customers in competitive market where people find tend to find alternatives in little dissatisfaction. Company need to also focus on the privacy of infor4mation of the customers along with the company’s won internal information. Therefore intellectual property refers to trade secrets, strategic plans, cost information, asset performance and prospects, and many legal documents. Securing IP is very important to the company. It needs to keep record of the sources of information and accessible authorized person of the valuable information. All valuable information should be encrypted so that these are readable or accessible on presence passkeys. Management need to develop the rights for access of information so that they can track who are using the information. Most important employees within the organization should aware about the dos and do not regarding the security of information system of the company. Management need to focus on practice of identification, encryption, control of access information for management of company information. Specific trainings are required to effective implementations of the privacy policies and practices of the company. Company needs to be very concern about identity theft. Unauthorized use of customer’s personal or financial information must not to be disclosed intentionally or unintentionally as customers always expect higher confidentiality of their personal records shared with the company. Answer 5 Air New Zealand use two major ERP systems, SAP and PeopleSoft. These two ERP systems are used for business reporting and data warehousing. The company has invested a huge amount for development of high secured information system within the organization. Chief Information Officer of the company reported that the company has invested $37 million for effective and efficient implementations of PeopleSoft for accounting and financial information recoding, capital asset management and payroll management (Watson, 2004). The company has developed steering committee level for efficient implementations, management and audit of these systems for getting optimum output from it in terms of high security and prevention of fraudulent activities and abuses. Structure of information technology division of Air New Zealand has been restructured to include a new team for managing PeopleSoft application center which is responsible for management of completed implementations of the project. This fact shows that the company is very concern about the security in internal information system of the company. SAP is used for supply chain of the company and it continues upgrade to next when available and required for up gradation. Air New Zealand use storage systems of its data provide by IBM. Both SAN and NAS have been used as storage systems and the company has a permanent client of IBM which provides more than 200 information technology based and operational work of the company. Therefore, Air New Zealand is highly concerned on its accounting and other information systems for better prevention from fraud and abuses. Reference Air New Zealand. (2012). Company Profile. Retrieve from http://www.airnewzealand.co.nz/corporate-profile. Dalci, I. & Tanis, N. V. (No Date). Benefits of Computerized Accounting Information Systems. Review of Social, Economic & Business Studies, Vol.2, 45-64. Retrieve from http://fbe.emu.edu.tr/journal/doc/2/2Article02.pdf. Klein, J. H. (1989). An Integrated Control Theory Model of Work Motivation. Retrieve from http://fisher.osu.edu/~klein_12/CTmodel.pdf. Sori, M. Z. (2009). Accounting Information Systems and Knowledge Management. EuroJournals Publishing, Inc. Watson, D. (2004). Air NZ CIO relishing challenges. Retrieved from http://computerworld.co.nz/news.nsf/news/EDFE235DE5727551CC256E7B00786326. Xu, H. (2003). Critical Success Factors for Accounting Information Systems Data Quality. Retrieved from http://eprints.usq.edu.au/1526/2/Xu_2003_whole.pdf. Read More